Market wrap: Bitcoin slips as crypto tax bill heads home

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Bitcoin retreated on Tuesday after rising nearly 20% over the past week. The cryptocurrency was trading at around $ 45,000 at the time of publication and has fallen 2% in the past 24 hours, compared to a loss of almost 1% in ether over the same period.

Analysts remain bullish on bitcoin despite regulatory uncertainty in the United States over crypto tax rules.

The crypto industry itself is new, and relying on an emerging tech industry for taxes could hinder its growth, wrote Lucia della Ventura, a researcher at Trinity College Dublin and head of legal compliance at the firm of Ledgermatic financial software, in an email to CoinDesk.

It is necessary to wait for the final vote, given that several amendments have been tabled as they can potentially change the impact of the bill on businesses, Ventura wrote.

Latest prices

S&P 500: 4,436.8, + 0.1% Gold: $ 1,728.6, -0.05% The 10-year Treasury yield closed at 1.347%, up from 1.319% on Monday

Cryptocurrency traders are not so focused on the expected passage of President Biden’s infrastructure bill, which as it stands will include new tax reporting rules that are very negative for the space. , wrote Edward Moya, analyst at online brokerage Oanda. an email to CoinDesk.

In the meantime, Wall Street is also closely monitoring bitcoin’s performance against the dollar and gold, Moya wrote.

Additionally, on Tuesday, the decentralized finance (DeFi) platform Poly Network came under attack as the alleged hacker drained around $ 600 million in crypto. The cyber attack contributed to a bad mood in the crypto market.

BTC and ETH options strategy

Bullish sentiment is increasing in the options market for bitcoin and ether. There has been an increase in demand for short-term options as BTC and ETH erased their multi-month price ranges, ”Delphi Digital tweeted. Both assets appear to be in a strong bullish trend, and speculators have bought short-term options.

The chart below shows the downward delta asymmetry of 25 for one-week BTC and ETH options contracts, which means there is more call demand than put options.

The chart shows the downward delta asymmetry of 25 for one-week BTC and ETH options contracts, which means there is more call demand than put options.

Source: Digital Delphi

Some traders see an opportunity to sell BTC and ETH volatility given recent activity in the options market. The chart below shows the recent increase in volatility over the course of three months and six months of BTC.

The chart shows the recent increase in volatility at the three- and six-month parity of BTC.

Source: bias

We maintain our short view of volatility. In fact, vega (older put and call options) appears to be a good sell at these high levels, QCP Capital wrote in a Telegram chat.

QCP said the frenzied buying of both BTC and ETH calls on the volatility curve led to the rally in the near term. We believe this flow is coming from funds and large speculators making big high-level bets, buying BTC strikes up to $ 80,000 to $ 100,000 and ETH strikes up to $ 8,000 to $ 10,000 as early as September. 2021 until June 2022, wrote QCP.

Large bitcoin transactions

The volume of Bitcoin blockchain transactions with values ​​of at least $ 1 million has increased by 10% since the beginning of August and represents almost 70% of the total value transferred.

These big investors, represented by high-value dollar transactions, have fueled bitcoin up nearly 20% since last week, Glassnode said.

A number of analysts say the trend shows these institutions are focusing more on the rise in cryptocurrencies than on potential hurdles, CoinDesks Muyao Shen wrote.

The graph shows the recent advance in the relative volume of bitcoin transactions.

Source: Glassnode

Blockchain spending behavior

The “spent output profit ratio” or SOPR, which is calculated by dividing the realized value of a spent output by the value at creation of the original unspent transaction output, has risen above 1, 0, peaked locally and then reset to 1.0, after months of trading below 1.0, according to Glassnode. The move indicates “a classic bullish reversal,” Glassnode said.

An SOPR value greater than 1 implies that the parts moved that day are selling, on average, at a profit (the price sold is higher than the price paid) ”and vice versa.

The most important thing to watch out for is whether SOPR holds above 1.0, Glassnode wrote. If SOPR continues to trade higher, this reflects a bullish scenario in which the market adequately absorbs profits made on spent coins. If, on the other hand, the SOPR drops and trades again below 1.0 on a sustained basis, this would suggest general market weakness and potentially a false rally.

SOPR analysis

Altcoin balance sheet

Poly Network Hacked with Potential Loss of $ 600 Million: As mentioned above, Poly Network was attacked on Tuesday, with the alleged hacker draining around $ 600 million in crypto, CoinDesks Eliza Gkritsi and Muyao Shen reported. Poly Network, a protocol launched by the founder of the Chinese blockchain project Neo, runs on Binance Smart Chain, Ethereum, and Polygon blockchains. Tuesday’s attack hit each channel consecutively, with the Poly team identifying three addresses where the stolen assets were transferred. As Poly tweeted news of the attack, the three addresses collectively held over $ 600 million in different cryptocurrencies, including USDC, Wrapped Bitcoin (WBTC, -1.88%), Wrapped Ether (ETH , -1.35%) and shiba inu (SHIB), show blockchain digitization platforms. After the hack, opportunistic cryptocurrency users flooded the Ethereum blockchain explorer with pleas for even a tiny fraction of the looting. Ether held on central exchanges hits lowest level in three years: total supply today, the lowest in three years, according to data from crypto intelligence platform OKLink. Of the 117 million ethers in circulation, only 11 million were held at addresses linked to CEXs, according to OKLink data. Ether is the second largest cryptocurrency by market cap. The main exiting factor is DeFi, Eddie Wang, principal researcher at OKLink, told CoinDesk. Wang pointed out that the Wrapped Ether (WETH) was the first address in the Ether-rich list, along with popular DeFi protocol deposits and liquidity pools to explain the ether exit of CEXs. is rewarded with a token sale of $ 111 million led by venture capital firm Andreessen Horowitz (a16z). Ribbit Capital, 10T Holdings, Alameda Research and Multicoin Capital have also invested, the company said on Tuesday. The decentralized telecommunications network now has more than 100,000 hotspots, a16z said in a blog post announcing the investment. The network uses “LoRaWAN” technology to connect devices (think scooters, electric bikes, or environmental sensors) to the Internet. Helium is one of the few real-world Web 3.0 projects to harness token-based incentives to fuel growth.

Relevant news:

Other markets

Most digital assets on CoinDesk 20 increased on Tuesday.

Notable 9:00 p.m. UTC (4:00 p.m. ET) winners:

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